Korea Inflation November 2016

Korea: Inflation stays constant in November

December 1, 2016

Consumer prices in Korea fell 0.1% month-on-month (mom) in November, contrasting October’s 0.1% rise. The result was mainly driven by a fall in the price of food and non-alcoholic beverages, with the recreation and culture sector also recording a significant price drop.

Inflation remained constant at 1.3% in November, undershooting analysts’ expectations by 0.2 percentage points. Annual average inflation was 1.0% in November, identical to October’s figure. Inflation continues to hover below the Central Bank’s target range of 2.5%–3.5%. Persistent weak inflationary pressures had caused the Bank of Korea to consistently miss its inflation target from 2013 to 2015, so in December 2015 the Central Bank set a lower target rate of 2.0% for the period between 2016 and 2018. Core inflation, which excludes fresh food and energy prices, fell from 1.5% in October to 1.4% in November.

The Bank of Korea expects inflation to average 1.0% in 2016 and 1.9% in 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 1.5% in 2017, which is unchanged from last month’s forecast. In 2018, the panel expects inflation to average 1.8%.

Author:Oliver Reynolds, Economist

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